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Loan Documents · NSA — California Notary Practice Questions

27 questions in this content area. 4 are published in full below with worked explanations.

1. A signature affidavit and name affirmation in a loan package exists to:

  • Establish that variations of the borrower's name refer to one person
  • BAuthorize the lender to change the agreed loan terms later
  • CWaive the borrower's right to rescind
  • DCertify the property's legal description

Why A is correct

Why this is correct: This affidavit resolves discrepancies in how a borrower's name appears across different documents (e.g., John A. Smith vs. J. Smith vs. John Smith). It legally affirms that all these variations refer to the same person, ensuring clear title and loan enforceability. Why the other choices are wrong: It does not authorize later changes to loan terms. It does not waive the right to rescind. It does not certify the property's legal description. Exam tip: The signature affidavit ties together different name spellings for one person.

2. An occupancy affidavit in a loan package states that:

  • AThat the borrower's income has been accurately reported
  • BThe property has no liens
  • The borrower intends to occupy the property as represented
  • DThe appraisal value is accepted

Why C is correct

Why this is correct: An occupancy affidavit is a sworn statement where the borrower affirms their intention to live in the property as their primary residence. This representation is crucial because owner-occupied loans typically have different terms (like interest rates) than investment or second-home loans. Why the other choices are wrong: It does not attest to the accuracy of reported income. It does not state the property has no liens. It does not signify acceptance of the appraisal value. Exam tip: Occupancy affidavit = borrower swears they will live there as stated in the loan application.

3. How does a mortgage differ structurally from a deed of trust?

  • A mortgage has two parties rather than three
  • BA mortgage secures only commercial property loans
  • CA mortgage does not need to be recorded to be effective
  • DA mortgage is signed by the lender rather than the borrower

Why A is correct

Why this is correct: A mortgage structurally has two parties: the mortgagor (borrower) and the mortgagee (lender). A deed of trust has three parties, including a trustee. Why the other choices are wrong: Mortgages can secure residential property. Mortgages must be recorded to be effective against third parties. The borrower signs the mortgage, not the lender. Exam tip: The key distinction is the number of parties, which affects foreclosure procedures, though the signing process is similar.

4. Which document in a package typically records the identification the notary examined?

  • AThe occupancy affidavit signed at the appointment
  • BThe compliance agreement retained by the lender
  • A customer identification or patriot act form
  • DThe settlement statement prepared by escrow

Why C is correct

Why this is correct: A Customer Identification or Patriot Act form records the ID details (type, number, issuer) for the lender's verification duties. It runs alongside the notary's journal. Why the other choices are wrong: The occupancy affidavit does not typically record ID details. The compliance agreement is for error correction. The settlement statement shows financial charges, not identification. Exam tip: This form is for the lender's records; the notary's journal is the notary's primary record.

23 more NSA Docs questions

Answers and explanations for these are in the study app.

  • A borrower asks the signing agent to explain what an affidavit in the package commits them to. What is the correct response?
  • A borrower asks which document in the stack actually creates the debt obligation. The promissory note is best described as:
  • A borrower is buying the home they will live in and asks about cancelling. What applies?
  • How many parties are named in a deed of trust?
  • In a state that uses a deed of trust rather than a mortgage, the parties named are:
  • In which transaction does the Notice of Right to Cancel apply?
  • Is a W-9 form in a loan package notarized?
  • Is the promissory note in a loan package normally notarized?
  • On a rescindable transaction, each borrower entitled to rescind must receive:
  • The dates on the Notice of Right to Cancel are blank. What should the signing agent do?
  • The TILA right of rescission gives three business days to cancel on:
  • Under TRID, the borrower must receive the Closing Disclosure at least:
  • What does a compliance or correction agreement commit the borrower to do?
  • What does a settlement statement in a closing package show?
  • What does an anti-coercion statement in a loan package address?
  • What does an initial escrow account disclosure statement set out?
  • What happens to a deed of trust when the loan is paid in full?
  • What is the relationship between the note and the security instrument?
  • What is the status of a condominium rider attached to a deed of trust?
  • Which documents in a typical refinance package require notarization?
  • Which forms did the Closing Disclosure replace for most consumer mortgage closings?
  • Which loan document is recorded in the county land records?
  • Which part of a deed of trust does the notary complete?
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